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Why Should You Add Alexandria (ARE) Stock to Your Portfolio?
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Office real estate investment trust (REIT) Alexandria Real Estate Equities, Inc. (ARE - Free Report) has a particular focus on collaborative life-science and technology campuses. The company, which is based in Pasadena, CA, specifically emphasizes on Class A properties concentrated in urban campuses.
These locations are characterized by high barriers to entry and exit, and a limited supply of available space. This highly dynamic setting adds to the productivity and efficiency of the tenants, in turn, ensuring steady rental revenues for the company. In fact, as of Dec 31, 2017, 55% of the annual rental revenues were derived from investment-grade tenants, whereas 80% of the annual rental revenues came from Class A properties in AAA locations.
This Zacks Rank #2 (Buy) company has gained 1.5% in the past six months against 7.6% decline of its industry. However, the stock is likely to rally significantly in the near term, as there are a number of favorable factors.
In fact, high demand for Class A properties in AAA locations has been boosting occupancy level. The company is witnessing strong demand for space in key life-science markets. It enjoys a solid 10-year historical occupancy rate of 95%, which is anticipated to continue in the upcoming quarters as well.
Alexandria continues to execute and deliver strong internal growth. The year 2017 marked its second highest year of leasing volume at nearly 4.6 million rentable square feet. Further, the company achieved rental rate growth of 12.7% on lease renewals and re-leasing of space. In addition, robust external growth, development and redevelopment of new Class A properties in AAA locations will likely boost its operating performance.
Moreover, Alexandria has adequate financial flexibility to cushion and enhance its market position. The company had $2 billion of liquidity as of Dec 31, 2017. Additionally, it has no debt maturities in 2018, while two loans are set to mature in 2019. Also, its current cash flow growth of 35.6% compares favorably with the 6.2% increase estimated for the industry.
Arbor Realty Trust’s Zacks Consensus Estimate for 2018 FFO per share has been revised 2.3% upward to 90 cents over the past two months. Its share price has risen 3.6% in six months’ time.
Extra Space Storage’s FFO per share estimates for the current year moved up 2% to $4.59 in a month’s time. Its shares have gained 7.8% over the past six months.
Sotherly Hotels’ FFO per share estimates for 2018 have been revised approximately 1.9% upward to $1.05 over the past month. The stock has climbed 16.7% during the past six months.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Why Should You Add Alexandria (ARE) Stock to Your Portfolio?
Office real estate investment trust (REIT) Alexandria Real Estate Equities, Inc. (ARE - Free Report) has a particular focus on collaborative life-science and technology campuses. The company, which is based in Pasadena, CA, specifically emphasizes on Class A properties concentrated in urban campuses.
These locations are characterized by high barriers to entry and exit, and a limited supply of available space. This highly dynamic setting adds to the productivity and efficiency of the tenants, in turn, ensuring steady rental revenues for the company. In fact, as of Dec 31, 2017, 55% of the annual rental revenues were derived from investment-grade tenants, whereas 80% of the annual rental revenues came from Class A properties in AAA locations.
This Zacks Rank #2 (Buy) company has gained 1.5% in the past six months against 7.6% decline of its industry. However, the stock is likely to rally significantly in the near term, as there are a number of favorable factors.
In fact, high demand for Class A properties in AAA locations has been boosting occupancy level. The company is witnessing strong demand for space in key life-science markets. It enjoys a solid 10-year historical occupancy rate of 95%, which is anticipated to continue in the upcoming quarters as well.
Alexandria continues to execute and deliver strong internal growth. The year 2017 marked its second highest year of leasing volume at nearly 4.6 million rentable square feet. Further, the company achieved rental rate growth of 12.7% on lease renewals and re-leasing of space. In addition, robust external growth, development and redevelopment of new Class A properties in AAA locations will likely boost its operating performance.
Moreover, Alexandria has adequate financial flexibility to cushion and enhance its market position. The company had $2 billion of liquidity as of Dec 31, 2017. Additionally, it has no debt maturities in 2018, while two loans are set to mature in 2019. Also, its current cash flow growth of 35.6% compares favorably with the 6.2% increase estimated for the industry.
Other Stocks to Consider
Investors can also consider other top-ranked stocks in the REIT industry like Arbor Realty Trust (ABR - Free Report) , Extra Space Storage Inc. (EXR - Free Report) and Sotherly Hotels Inc. (SOHO - Free Report) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arbor Realty Trust’s Zacks Consensus Estimate for 2018 FFO per share has been revised 2.3% upward to 90 cents over the past two months. Its share price has risen 3.6% in six months’ time.
Extra Space Storage’s FFO per share estimates for the current year moved up 2% to $4.59 in a month’s time. Its shares have gained 7.8% over the past six months.
Sotherly Hotels’ FFO per share estimates for 2018 have been revised approximately 1.9% upward to $1.05 over the past month. The stock has climbed 16.7% during the past six months.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>